A Palmerston North family's quick thinking in the face of a house fire failed to save their lounge, but resulted in a lucky escape for three young children.

A fire at a Heretaunga St house at lunchtime yesterday landed a mother and son in Palmerston North Hospital with burns, while three children escaped shaken but unscathed.

Troy Paki had been nearby at work when a relative called to say his house was on fire.

Mowing the lawn across the road was Perry Young, who watched the drama unfold.

"I just saw the people come rushing out with a child and there was a a great burst of smoke coming out with them," Young said.

"The poor people. It happened pretty quickly."

The three youngest of the Paki family, aged three, five and 13, escaped the lounge fire with minor burns to their hands, thanks to swift action by their mother and elder brother, who were hospitalised after retrieving the children from the burning lounge.

Milson fire station officer Chris Faithfull commended the family's response to the fire.

All five people inside got outside within minutes, and the mother had closed the door to the lounge as they fled, containing the blaze to one room and enabling it to be quelled quickly.

It appeared the Pakis' eldest son, aged 27, carried one of the children outside, Faithfull said. Witnesses said he had thrown burning cushions out the window.

Paki arrived a short time later and looked after his three youngest children across the road as emergency services took control of the scene.

"I'm just grateful for the fast response from the local fire and ambulance service," Paki said.

"I'm just happy my family got out."

The family had been planning to move out of the Roslyn rental home in about a week, he said.

"We might be moving out a bit earlier."

Palmerston North and Milson fire station staff put out the fire, while police blocked one side of the road.

An ambulance tended to the family at midday.

Faithfull said the fire was a reminder to check smoke alarms regularly - there were several in the house but none sounded as they appeared to not be working.

The cause of the fire was still being investigated, but it appeared to have begun on the couch in the lounge, burning the couch, a wall and causing smoke damage throughout the house.

"There's no point having things bolted to the ceiling if they are not going to make any noise," Faithfull said. "It's just a reminder to check your smoke alarm is working."

The fire services would be happy to check people's smoke alarms free of charge if they were having difficulty determining whether they were working or needed new batteries, he said.